How ACA Healthcare Law Could Affect P/C Insurance Costs and Claims

The ACA is going to affect the P&C market and pricing as well. Example: An employee who has a wonderful Bronze ACA plan with a $5,000 deductible and $12,000 out of pocket fakes an injury at work and files Workers Compensation for first dollar benefits or claims he got sick with an unhealthful work environment. What if he slips and falls in a parking lot of a store or inside the store. Might as well go after the store since his health insurance has the deductible he can’t afford. The ACA/Obamacare is the law of unintended consequences.

“The report also says that there could be an increase in fraud due to the diversion of career criminals to the property/casualty business.

On the other hand, the ACA could bring about a decrease in fraud due to fewer uninsured and a decrease in future medical damages. The fraud reduction is likely to have a minor impact and the medical damages, an uncertain impact, according to IRC.”

Career criminals are career criminals. They are not going to reduce their attempst at fraud just because they are now covered under Obamacare. It’s like the thugs out there who intentially cause Auto accidents and then feign serious injuries to collect large pain and suffering settlements. You think those types will reduce their efforts at fraud because they now have healthcare? Committing fraud is their main source of income, they are not going to give it up. Bad assumption.

“The report also identifies a healthier population and more appropriate utilization of medical services as possibly affecting property/casualty but ventures no estimate of their cost impacts.”

Healthier population due to Obamacare? Hey, the main reason so many Amerucans are not all that healthy is because they have bad diets (fast food, McDonald’s and all) and lead sedentary lives (gym? what gym?). Obamacare does nothing about making people lead more healthy lifestyles. As a matter of fact his other economic policies which encourage less work and more reliance on the public dole will most likely make these people even more lazy and sedentary and even less healthy. Also consider with higher deductibles and co-pays I can see the possibility of many forgoing preventative medicine making them even less healthy. I guess we’ll see but pretty much any government led program I have ever seen which claimed to reduce costs always seems to increase them.

Very good analysis Dave. By the way, the young and healthy that Michelle now calls “knuckleheads” are the very ones that are getting gouged on premiums. If there were any true underwriting, the young would pay the cheapest rates since they rarely utilize healthcare because most think they are invincible.

Casualty insurance is still related to providing coverage for an insured’s legal liability to others. Workers’ Compensation is still designed to cover work-related injuries. Medical insurance, including Obamacare, won’t impact those principles. And, as already pointed out, criminals will be criminal regardless of what laws we have in place. Obamacare has had some very negative consequences, but I don’t think I can credit it with either increasing or decreasing insurance fraud.

Having more Americans insured under ACA plans does not increase the claims risk to P&C Carriers. It should improve a trend of cost shifting from hospitals and claimant’s without medical insurance that has been increasing for years already. Medical payments have been an easy target for claimants and providers and the P&C Industry has no one to blame but themselves. Change one word in Med Pay – from “will” to “may” pay – or at least, make med pay secondary to other primary coverage. Small business needs relief from being a substitute medical provider for every clumsy, unaware, or aged customer.

John, I have a four location restaurant account who was hit by a claim that will end up being a Med Pay claim. A woman alleged that she fell in the parking lot of one of the stores even though no one saw it and she didn’t report it to management and supposedly it happened 6 months ago. She obviously filed the “injury” on her health insurance. After deductible, she had out of pocket expense. Our insured received a call from Aetna, her carrier wanting to recoup their expenses and asking for Medical Payments. All we could do was report it to our carrier and let them handle it. They will probably pay it although in our opinion, it should not be paid.

I’ve insured many restaurants, hotels, bowling alleys, and grocery chains. On all of them, we have either lowered the med pay or excluded it all together. When a small limited-service hotel pays $15k for their package, it only takes 3 $5k med pay claims to get them to a 100% loss ratio. Most of my clients want to provide some “first aid” or emergency care to their guests, but don’t want to take it in the shorts. Insurance carriers have steadily been increasing med pay limits, with the norm being $10k, and trying to sell it as a benefit. We don’t think it is.

Some are surplus, some not. North Pointe, Conifer, and Houston Casualty have programs.

February 25, 2014 at 11:58 am

Libbysays:

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Not many cert requests for restaurants, hotels, bowling, or grocery stores. Maybe for contractors, but they wouldn’t use the coverage anyway.

February 25, 2014 at 4:49 pm

FFAsays:

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Libby, probably just land lords???

February 26, 2014 at 1:11 pm

Libbysays:

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Maybe. I didn’t run into any, though.

February 27, 2014 at 3:45 pm

Agentsays:

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FFA, this is a little off the subject, but how satisfied are you with your agency website? Does it drive traffic to you on consumer Get a Quote for Auto, Home, Business, Life? We had a local webmaster build our site about 10 years ago and make some minor adjustments to it, add some more features, but it has not performed very well and we thought he was charging too much for his service as well.

We asked a few other agent friends who they used for website support, optimization etc. They put us onto a company specializing in insurance websites and they were really happy with the results the past 2 years. We signed up for it today and the site will be up and running within a week. It has so many features and will send eletters to customers you have an email address on etc. Pretty cool and the price is right. It is less than half what our webmaster was charging us and he wasn’t optimizing on Google or Bing to keep us on the first page like he said he would do. If you need any help on this, I will send you their website address and you can pull them up and see what they do. Since you are going to emphazize P&C now, it may help you with your efforts.

February 27, 2014 at 4:41 pm

Libbysays:

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Don’t forget social media. That’s the big thing now for the younger set.

February 25, 2014 at 12:34 pm

FFAsays:

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Good info. Thanks. I have never put through a Med Pay claim against any Commercial Policy (Except Auto). Cant wait to see this years requirements on my guys working in the Hancock Center and Sears Tower.. They were requesting $10M GL on one of my guys running just Diagnostics on the HVAC in years past.

FFA, Med Pay limits on Packages have always been a good will gesture to try to avoid a legal liability situation. They figure they can pay a small med pay claim and avoid a lawsuit. Most companies will not defend something under $10,000. They just say to the claimant or their attorney, what can we make this go away for, then pay it.

FFA, I have seen similar requests from the big Oil & Gas companies on insurance requirements. They want to make sure they are relieved from as much liability as possible. They ask for very high limits with $5-10 Mil Umbrellas, Additional Insureds, Waiver of Subrogation etc. Our little contractor often cannot afford all the insurance unless he has a very good contract and can build in insurance cost into his contract. Some can, some can’t.

Libby, Social Media is built in to this site. I am not much on it so we will turn that on to a younger partner who is into that. We expect more traffic to be driven our way and if we can get their nose out of their iphone long enough to listen, we might actually make some new sales.

Libby, we are not geeks and don’t know what the going price is for web hosting, optimization etc. What we have discovered is our former webmaster was very proud of his work and he wasn’t doing much for what he was charging. The new one has already sent us a screen shot of the home page and it is outstanding. These people are extremely professional, do insurance websites nationwide and have it down to a science. I hope you weren’t being too sarcastic with your comment.

Do you have carriers that will write Med Pay over $10,000 limit? That is the max on any of ours. Many still write a $5,000 limit, but we can get more if we ask. Restaurants and retail stores seem to be the most vulnerable to slips and falls since they have a lot of foot traffic.

You’d better watch out for his loss ratio then. It only takes one to blow it up. Why would anyone want to give away max limits if they are not negligent? It’s not smart business sense and they will be pissed at you when their premium skyrockets.

BI will defend any claim over the med pay limit. If there is negligence, they will pay just as the med pay would. Doesn’t make any sense not to lower med pay.

FFA, guess how much my wife’s Spine Stimulator surgery was. The initial bill was for $106,000 counting the doctor and the device and that was day surgery. Of course, they didn’t get paid that much being in a network and accepting the standard payment for it, My guess is they will get less than half of their bill, but it was still quite expensive. By the way, she is doing well and has gotten a lot of relief from her pain. We plan on making a trip this weekend and see how she does.

Not on the package. On the Auto, Travelers still does $100,000. My others – Hartford I think will go to $50,000 and my regional will go to $25,000.

Once upon a time, I had a guy get hit head on. Low speed, buy he needed neck surgery. Had $100,000 on him. His Health Carrier wanted nothing to do with it. So the car policy paid it in full. Accident happened a week after his wife called me to reduce it to $5000. Told her how much she would save if she did that. She told me that she would talk to her Hubby about it. Next I heard, he needed it. Per State Farms states, $100,000 is the most profitable med pay limit there is. I dont write it high for profit issues. I write it high because when people need it, it is there. My wife will have burnt through her limit next week when she has this procedure done on her knee.

Wow FFA, on Personal or Commercial Auto, we don’t have anyone who does Med Pay with those limits and we have Travelers as well. I guess different states, different limits. We do believe in high limits for liability and try to do an Umbrella for our clients if we possibly can. Uninsured/Underinsured Motorists can also be helpful if the other driver was at fault and either didn’t have insurance or was terribly underinsured. We write the same limit for that as we do the primary liability limits. Example: I was hit about 6 years ago by a dude who blatantly ran a red light. Totalled my brand new car, gave me a concussion and injured my wife as well. The guy had no insurance, no license, tried to leave the scene of the accident until his car stopped running a block away. He had a record a mile long, but the rookie cop investigating didn’t run him through his on board computer so he let the guy go. Ended up being a $70,000 claim for U/M BI & PD and the carrier could never find him to subrogate. Good thing I had high limits because it took care of everything except for a $250 PD deductible.

They probably wouldn’t have been able to get much out of him anyway. My Mom was hit by a hit-and-run, lost her left eye, permanently scarred, and 28+ surgeries. She blew through $50k before she even left the hospital. Luckily she had health insurance, too.

20 years ago, my brother had a major injury. Out of work for two years and multiple surgeries. He had $100,000 med pay on the car and he blew through that. There were two other injuries in his car and the offending party was killed on impact.

FFA, we had a customer hit by a DUI driver. Our customer was injured severely and the DUI guy walked away without a scratch. Where is the justice? Another U/M claim and our customer happened to have high U/M limits so he recovered without any trouble.

Yes, if we can put aside our differences on Obamacare and the Progressive agenda, we can talk about P&C issues and how best to serve our customers and grow our business. Apparently I am doing something right, because I have an unbroken record of growth each year and have companies calling on me all the time to appoint. We have to turn most down because it is hard to feed a bunch of companies to keep them happy. We have had to part ways with a few carriers over the years because they gave poor service, weren’t competitive with the others we have and the competition. Encompass comes to mind and they were a joke. I couldn’t ever get used to an Allstate owned carrier in my office.

I too continue to post growth. Last year represented a 35% growth in revenue. Through first three quarters, that was at 56%. Last quarter with focus turned to ACA, took a big hit in hopes of future growth. Wrong decision on my part….

FFA, you woke up in the nick of time on Obamacare and focusing on P&C is the right thing to do. By the way, HHS says they will not be publishing any more monthly reports on enrollment numbers. I wonder why that is.

Yes it really is humorous how problems like this one begin looking extremely insignificant when compared to the world news. The next part of the cold war, the actual true war that erupts, Russia-China gas offer axis… Yet here we are with this social media issues, – can we ever see the world has altered? I’m not expressing everything you reveal is unnecessary, Iam indicating that the certain amount of detachment is healthful. Thanks,